NCLAT rejects insolvency appeal as claimed amount below Rs 1 crore threshold under Section 9 IBC

NCLAT dismissed the appeal challenging rejection of insolvency application under Section 9 of IBC. The appellate tribunal upheld the adjudicating authority's findings that the claimed amount fell below the Rs. 1 crore threshold as interest alone cannot constitute operational debt under the Code. The tribunal relied on SS Polymers precedent, noting that unilateral interest stipulation without agreement weakens the claim. Additionally, pre-existing disputes existed between parties regarding dishonored cheques, with respondent alleging fraudulent date changes and filing police complaint for cheating and forgery. NCLAT confirmed that plausible pre-existing dispute contentions suffice for Section 9 application rejection.

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Issues Involved:
1. Whether the present application meets the minimum default amount of Rs. 1,00,00,000/- as provided under Section 4 of the Insolvency and Bankruptcy Code, 2016.
2. Whether there is a pre-existing dispute with respect to the amount claimed to be due in the application.

Detailed Analysis:

Issue 1: Minimum Default Amount
1. Facts and Contentions:
- The Appellant supplied chemicals worth Rs. 1,82,54,891/- based on purchase orders and raised seven invoices with a payment term of 70 days.
- The Respondent made partial payments amounting to Rs. 20,71,000/- and issued a debit note of Rs. 72,25,140/-.
- The Appellant's claim includes an interest amount, which is not part of the operational debt under Section 5(21) of the Code.

2. Judgment:
- The Adjudicating Authority concluded that the operational debt amount, after considering the payments and debit note, is less than the threshold limit of Rs. 1,00,00,000/-.
- The Tribunal upheld this conclusion, noting that the remaining amount of Rs. 89,58,751/- is indeed less than the threshold limit.
- Interest cannot be included as part of the operational debt under Section 5(21) of the Code.

Issue 2: Pre-existing Dispute
1. Facts and Contentions:
- The Respondent alleged adjustments based on a separate transaction involving the supply of 450 MT of IPA, of which only 143.850 MT was lifted and paid for.
- The Respondent issued six cheques towards the claimed liability, which were dishonored with the remark "payment stopped by drawer."
- The Respondent filed a police complaint alleging forgery, and the Appellant also filed a police complaint against the Respondent.

2. Judgment:
- The Tribunal noted that numerous communications and police complaints between the parties substantiate the presence of pre-existing disputes.
- The Respondent's claims regarding separate transactions, dishonored cheques, and police complaints were well-documented and predate the demand notice.
- The Tribunal referred to the Supreme Court's decision in Mobilox Innovation Pvt. Ltd. Vs. Kirusa Software Private Limited, emphasizing that if a plausible contention about a pre-existing dispute exists, the application under Section 9 of the Code must be rejected.

Conclusion & Order:
- The operational debt amount claimed by the Appellant is less than the threshold limit required under Section 4 of the Code.
- There are pre-existing disputes between the parties.
- The present appeal is dismissed, and the Order of the Adjudicating Authority dated 17th January 2024 in C.P. (IB)-892 (ND)/2022 is upheld.
- The parties are directed to bear their own costs.

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